An eligible rollover of funds from one IRA to another is a non-taxable transaction. Rollover distributions are exempt from tax when you place the funds in another IRA account within 60 days from the date of distribution. Many plan administrators can even perform a direct rollover for you, which eliminates the risk of missing important funding deadlines. Even though you aren’t required to pay tax on this type of activity, you still must report it to the Internal Revenue Service. Reporting your rollover is relatively quick and easy – all you need is your 1099-R and 1040 forms.
Look for Form 1099-R in the mail from your plan administrator at the end of the year. Your rollover is reported as a distribution, even when it is rolled over into another eligible retirement account.
Report your gross distribution on line 15a of IRS Form 1040. This amount is shown in Box 1 of the 1099-R.
Report any taxable portion of your gross distribution. If the only distribution you received from the account was directly rolled over into an eligible account, write a zero on line 15b of your Form 1040. However, if you did not roll over your entire distribution, a portion of it is still taxable. Subtract the rollover funds from the gross distribution and report the balance on line 15b. In some cases, your correct taxable portion is indicated in box 2 of your 1099-R. However this occurs only when your plan administrator performs a direct rollover for you. If you received a check for the distribution funds and rolled them over yourself, your plan administrator may not know you performed an eligible rollover transaction. In this case, box 2 may incorrectly show that your entire distribution is taxable.
Write “Rollover” in the space to the left of line 15b. This explains why the distribution amount shown on line 15a is more than the taxable amount shown on line 15b.